New Assignment of Benefits Law

Post Hurricane Michael and Irma, there’s a brand new statute taking effect on July 1, 2019 that affects Assignments of Benefits. This is VERY big deal that will affect millions of home and business owners into the future, as well as every contractor, roofer or other vendor that seeks an assignment of the benefits of an insurance contract. I included an article explaining the new statute that your readers/viewers might find interesting. Having been involved with thousands of insurance claims over decades, and having been on the plaintiff and defense side of insurance cases, including service as the lead counsel for one of the largest insurance companies in the world, I am happy to explain further if you need. A word version summary of the content is also found below:

Assign of Things to Come: The New Statute Restricting Assignments of Benefits Goes Into Effect July 1, 2019

Florida has dealt a huge blow to those vendors seeking to secure an “Assignment of Benefits” (AOB) of an insurance policy. The new statutes – §627.7152 and §627.7153, which takes effect on July 1, 2019 – provide new requirements and restrictions for the use of AOBs. Let’s understand what the new law entails.

Requirements for a Valid Assignment. §627.7152 requires that the AOB be signed and in writing; and allow rescission (without penalty) by the insured giving notice within 14 days of execution, at least 30 days after the date work on the property is scheduled to commence if the assignee has not “substantially performed,” or at least 30 days after the execution of the agreement if the agreement does not contain a commencement date and the assignee has not begun substantial work on the property. It must also contain a provision requiring the assignee to provide the AOB to the insurer within 3 business days after the date on which the assignment agreement is executed or the date on which work begins, whichever is earlier.

Estimates Required. The AOB now must also contain a written, itemized, per-unit cost estimate of the services to be performed by the assignee; the AOB may only cover work to be performed by the assignee for services to protect, repair, restore, or replace a dwelling or structure or to mitigate against further damage to such property.
Disclaimer Required; No Fees for Rescission. The AOB must also contain an 18-point (in large CAPS) disclaimer that explains the loss of rights, ability to rescind, and other requirements. The AOB may not contain any kind of penalty or fee for rescission.

Emergency Repairs. The law addresses emergency repairs that may be needed to protect the property, stating that the AOB cannot be for more than the greater of $3,000 or 1% of the Coverage A limit.

AOBs Must Have All Requirements or They Are Void. The new statute is clear that an assignment agreement that does not comply with all parts of the law is invalid and unenforceable.

AOB Holders Have Heightened Burdens. An AOB holder must demonstrate that the insurer is not prejudiced by the holder’s failure to maintain records of all services and all named insureds; when requested, the holder must provide the insurer with requested records and documents related to the services provided and deliver the assignment agreement to the insurer within 3 business days after executing the assignment agreement or work has begun, whichever is earlier. The AOB may be required – before filing suit – to attend Examinations Under Oath and to participate in the Mediation or Appraisal process.

AOB Holder Cannot Sue the Insured. The insured is provided additional protection, as the AOB holder waives all claims against the named insureds for payment of the specified loss (in other words, the holder can’t come back and sue the insured if they fail in their litigation against the insurer). The AOB holder also must indemnify and hold harmless the insured from any litigation, damages, losses, etc. if the policy prohibits assignment of benefits.

AOB Must Satisfy Various Notice Requirements. The AOB holder must provide a written Notice of Intent (NOI) to Initiate Litigation (with a detailed invoice, including specific labor hours and other information) at least 10 days before filing suit, but such Notice (NOI) may not be served before the insurer has made its coverage determination. The insurer must respond to the Notice in writing within 10 business days after receiving it by making a presuit settlement offer or requiring the assignee to participate in appraisal (or other method of alternative dispute resolution).

Insurance Companies May Now Restrict AOBs. §627.7153 provides that insurance companies can have language in their insurance policies that prevent or limit assignment provided that certain conditions are met, such as requiring the insurer to charge less for the assignment-limiting policy (and offer a policy with no such limitation at the same time) and mandating large detailed and bold-faced disclosures, among other requirements.